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DC plans

July 2022 legislative update – review of key bipartisan retirement policy reform proposals

On March 29, 2022, the House of Representatives, by a 414-5 vote, approved the Securing a Strong Retirement Act of 2022 (SECURE 2.0), a synthesis of the Ways and Means Committee’s Securing a Strong Retirement Act of 2021 and the Education and Labor Committee’s RISE Act. On June 14, 2022, the Senate Health, Education, Labor, and Pensions (HELP) Committee, by a voice vote, passed the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (the RISE & SHINE Act). And, on June 22, 2022, the Senate Finance Committee unanimously approved the Enhancing American Retirement Now (EARN) Act. In what follows we provide a brief summary of certain key provisions of these three bills.

Which participants can sue?

A number of recent cases have addressed the issue of which participants have “standing” to bring an ERISA fiduciary action against plan fiduciaries. The cases generally focus on the issue of whether the participant-plaintiffs have a “concrete stake” in the dispute. In what follows, we discuss two recent cases involving participant-plaintiffs in defined contribution plans…Read More

Senator Tuberville introduces Financial Freedom Act

On May 5, 2022, Senator Tuberville (R-AL) introduced the “Financial Freedom Act of 2022.” The bill would push back on recent positions the Department of Labor has taken with respect to, e.g., “climate related financial risk,” private equity, and cryptocurrency investments, particularly in participant directed defined contribution plans.

Post-Hughes v. Northwestern – plaintiffs win in three motion-to-dismiss decisions

On January 24, 2022, in a unanimous decision, the Supreme Court vacated the Seventh Circuit’s decision in Hughes v. Northwestern – an ERISA prudence case implicating a number of issues that have been raised in 401(k) fee litigation. The Court rejected the Seventh Circuit’s reliance on the availability of lower cost alternatives as a defense to claims that the cost of certain funds and of plan recordkeeping was unreasonably high, remanding the case for consideration under the rule in Tibble v. Edison, that a fiduciary has an obligation to remove imprudent investments.

SECURE 2.0 Approved by House in 414-5 vote

On March 29, 2022, the House of Representatives, by a nearly unanimous (414-5) vote, approved the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The bill represents a synthesis of the Ways and Means Committee’s Securing a Strong Retirement Act of 2021 and the Education and Labor Committee’s RISE Act.

Court grants Intel’s motion to dismiss in litigation challenging the use of “non-traditional assets” in a TDF

On January 8, 2022, the United States District Court for the Northern District of California granted defendant plan fiduciaries’ motion to dismiss in Anderson v. Intel, a case involving a challenge to Intel’s inclusion of non-traditional assets (including hedge funds, private equity, and commodities) in Intel’s 401(k) plan default target date fund (TDF). Plaintiffs argued…Read More

Parsing DOL Guidance On Private Equity In DC Plans

In June 2020, the (Trump Administration) Department of Labor issued an Information Letter with respect to the inclusion of private equity investments as a “component” of a fund (e.g., a target date fund) included in a fund menu in a participant directed defined contribution plan. On December 21, 2021, the (Biden Administration) DOL issued a “Supplemental Statement” with respect to the 2020 Information Letter, qualifying and limiting the application of the (2020) Information Letter in some respects.